Asper v. Wells Fargo Bank et al

Filing 16

ORDER Granting in Part 6 Defendant's Motion to Dismiss. The Court grants in part Defendant's motion to dismiss, and dismisses Plaintiff's FCBA claim with leave to amend. Plaintiff must file an amended complaint that cures the defici encies identified herein on or before 6/8/2018. The Court defers ruling on the sufficiency of Plaintiff's state law claims until Plaintiff can state a claim arising under federal law, or demonstrate that the Court has diversity jurisdiction. Signed by Judge Michael M. Anello on 5/17/2018. (rmc)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9
10
11
12
13
14
15
16

SOUTHERN DISTRICT OF CALIFORNIA
Case No.: 18cv0049-MMA (JLB)

LAITH KH ASPER,
v.

ORDER GRANTING IN PART
DEFENDANT’S MOTION TO
DISMISS

Plaintiff,

WELLS FARGO BANK, a National
Association,

[Doc. No. 6]

Defendant.

17
18
19

Plaintiff Laith KH Asper (“Plaintiff”) filed this action against Defendant Wells

20

Fargo Bank, N.A. (“Defendant”) on January 5, 2018, alleging four causes of action in

21

connection with real property located at 1247 Jamacha Road, El Cajon, California,

22

92019, for: (1) fraud; (2) violations of the Fair Credit Billing Act (“FCBA”), 15 U.S.C. §

23

1666, et seq.; (3) violations of the California Homeowner Bill of Rights (“HBOR”); and

24

(4) violations of California’s Unfair Competition Law (“UCL”), Business & Professions

25

Code § 17200, et seq. See Complaint. Defendant moves to dismiss Plaintiff’s Complaint

26

for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). See Doc.

27

No. 6. Plaintiff filed an opposition, to which Defendant replied. See Doc. Nos. 9, 14.

28

The Court found the matter suitable for determination on the papers and without oral
-1-

18cv0049-MMA (JLB)

1

argument pursuant to Civil Local Rule 7.1.d.1. See Doc. No. 15. For the reasons set

2

forth below, the Court GRANTS IN PART Defendant’s motion to dismiss.
BACKGROUND1

3
4

Plaintiff Laith Asper is an individual residing at 1247 Jamacha Road, El Cajon,

5

California. Complaint ¶ 4. Defendant is “a national banking association established

6

under the laws of the United States of America.” Id. ¶ 5.

7

In November 2007, Plaintiff and his wife borrowed $570,000 from World Savings

8

Bank, FSB (Wells Fargo’s predecessor) pursuant to a promissory note that was secured

9

by a Deed of Trust recorded against the real property located at 1247 Jamacha Road, El

10

Cajon, California. See Doc. No. 7 (hereinafter “RJN”), Exh. A. Plaintiff defaulted on the

11

loan, and the trustee under the Deed of Trust recorded a Notice of Default in April 2010.

12

RJN, Exh. C. In April 2011, the trustee recorded a Notice of Sale. RJN, Exh. D.

13

Plaintiff then filed for bankruptcy, which was dismissed a few weeks later. RJN, Exh. E.

14

Shortly after the first bankruptcy was dismissed, the foreclosure sale was reset.

15

Plaintiff filed for bankruptcy a second time, however, in January 2012. RJN, Exh. F.

16

The bankruptcy filing was dismissed without Plaintiff receiving a discharge. Id. The

17

trustee recorded a new Notice of Sale in November 2015. RJN, Exh. G. The Notice of

18

Sale indicated that Plaintiff owed $721,712.11, and that the sale would proceed on

19

December 2, 2015 if Plaintiff did not pay the debt. Id. On December 2, 2015, Plaintiff

20

filed for bankruptcy a third time. RJN, Exh. H. The bankruptcy filing was again

21

dismissed a few weeks later. Id.

22

The foreclosure sale was then reset. Plaintiff filed for bankruptcy for the fourth

23

time in February 2016, which was dismissed shortly after the filing of bankruptcy. RJN,

24

Exh. I. Wells Fargo recorded a new Notice of Trustee’s Sale in August 2017, and

25

26
27
28

1

Because this matter is before the Court on a motion to dismiss, the Court must accept as true
the allegations set forth in the complaint. See Hosp. Bldg. Co. v. Trs. Of Rex Hosp., 425 U.S. 738, 740
(1976).

-2-

18cv0049-MMA (JLB)

1
2

rescheduled the foreclosure sale for October 2, 2017. RJN, Exh. K.
On or around September 18, 2017, Defendant sent Plaintiff a billing statement that

3

listed an unpaid principal balance of $499,000.38 on the mortgage loan with Wells Fargo.

4

See Doc. No. 9-1. Plaintiff filed for bankruptcy for the fifth time on September 29, 2017.

5

RJN, Exh. L. In his bankruptcy petition, Plaintiff alleged a credit billing statement error

6

on the September 2017 billing statement he received from Defendant. See Complaint ¶ 8.

7

After “‘receiving notice from an obligor’ regarding the correction of disputed billing

8

errors, Wells Fargo in fact has adversely ‘reported on the obligor’s credit rating or credit

9

standing because of the obligor’s failure to pay’ in violation of [the FCBA].” Id. (quoting

10

15 U.S.C. § 1666a(a)). The bankruptcy case was dismissed on January 4, 2018. RJN,

11

Exh. L.

12

The following day, on January 5, 2018, Plaintiff commenced the instant action

13

against Defendant alleging: (1) fraud; (2) violations of the FCBA; (3) violations of

14

HBOR; and (4) violations of the UCL. See Complaint. On February 14, 2018, Plaintiff

15

filed an ex parte motion for a temporary restraining order (“TRO”) seeking to prohibit

16

Defendant from “engaging in or performing any act to deprive Plaintiff of his interest and

17

possession of the subject property including the ‘trustee sale’ planned for February 22,

18

2018[.]” Doc. No. 11. The Court denied Plaintiff’s motion for a TRO because Plaintiff

19

failed to show “a likelihood of success on the merits of his claims” and failed to “raise[]

20

serious questions going to the merits [of such claims].” Doc. No. 13 at 3.2

21
22

LEGAL STANDARD
A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro

23

v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain

24

statement of the claim showing that the pleader is entitled to relief. . . .” Fed. R. Civ. P.

25
26
27
28

2

In opposition to the instant motion, Plaintiff requests the Court enjoin Defendant from
violating the FCBA. See Doc. No. 9 at 10. Plaintiff’s request is procedurally improper and moot in
light of the Court’s ruling on Plaintiff’s ex parte motion for a TRO. See Doc. No. 13.
-3-

18cv0049-MMA (JLB)

1

8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is

2

plausible on its face.” Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

3

570 (2007). The plausibility standard thus demands more than a formulaic recitation of

4

the elements of a cause of action, or naked assertions devoid of further factual

5

enhancement. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Instead, the complaint “must

6

contain allegations of underlying facts sufficient to give fair notice and to enable the

7

opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.

8

2011).

9

In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth

10

of all factual allegations and must construe them in the light most favorable to the

11

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996).

12

The court need not take legal conclusions as true merely because they are cast in the form

13

of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987).

14

Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to

15

defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

16

In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not

17

look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903,

18

908 (9th Cir. 2003). “A court may, however, consider certain materials—documents

19

attached to the complaint, documents incorporated by reference in the complaint, or

20

matters of judicial notice—without converting the motion to dismiss into a motion for

21

summary judgment.” Id.; see also Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.

22

2001). Where dismissal is appropriate, a court should grant leave to amend unless the

23

plaintiff could not possibly cure the defects in the pleading. Knappenberger v. City of

24

Phoenix, 566 F.3d 936, 942 (9th Cir. 2009).

25
26
27
28

DISCUSSION
A.

Request for Judicial Notice & Incorporation by Reference
As an initial matter, Defendant requests the Court take judicial notice of sixteen

(16) documents in connection with its motion to dismiss (Exhibits A-L). See RJN.
-4-

18cv0049-MMA (JLB)

1

Specifically, Defendant requests the Court take judicial notice of: (1) the Deed of Trust,

2

dated November 5, 2007; (2) various documents relating to the history of World Savings

3

Bank, FSB (Wells Fargo’s predecessor); (3) Notice of Default and Election to Sell Under

4

the Deed of Trust, dated April 9, 2010; (4) Notice of Trustee’s Sale, dated April 27, 2011;

5

(5) the docket for Chapter 13 Bankruptcy Case No. 11-19595-PB13, filed on December

6

1, 2011; (6) the docket for Chapter 13 Bankruptcy Case No. 12-00320-PB13, filed on

7

January 12, 2012; (7) Notice of Trustee’s Sale, dated November 2, 2015; (8) the docket

8

for Chapter 13 Bankruptcy Case No. 15-07797-MM13, filed on December 2, 2015; (9)

9

the docket for Chapter 13 Bankruptcy Case No. 16-00738-MM13, filed on February 16,

10

2016; (10) Judgment in a Civil Case filed on March 3, 2017; (11) Notice of Trustee’s

11

Sale, dated August 18, 2017; and (12) the docket for Chapter 13 Bankruptcy Case No.

12

17-05916-MM13, filed on September 29, 2017. See id. Plaintiff did not file an

13

opposition to Defendant’s request for judicial notice.

14

Generally, a district court’s review on a 12(b)(6) motion to dismiss is “limited to

15

the complaint.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) overruled

16

on other grounds by Galbraith v. Cnty. Of Santa Clara, 307 F.3d 1119, 1125–26 (9th Cir.

17

2002) (quoting Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993)).

18

However, “a court may take judicial notice of matters of public record,” id. at 689

19

(internal quotations omitted), and of “documents whose contents are alleged in a

20

complaint and whose authenticity no party questions, but which are not physically

21

attached to the pleading,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled

22

on other grounds by Galbraith, 307 F.3d at 1125–26; see also Fed. R. Evid. 201.

23

Here, the Court finds that Exhibits A-L are all public records which are properly

24

the subject of judicial notice. Specifically, Exhibits A, C, D, G, and K have been

25

recorded in San Diego County Recorder’s Office; thus, these exhibits are a matter of

26

public record. See Fed. R. Evid. 201(b). Moreover, Exhibits E, F, H, I, and L are

27

similarly a matter of public record, as “a paper filed in a case under [the Bankruptcy

28

Code] and the dockets of a bankruptcy court are public records.” Reusser v. Wachovia
-5-

18cv0049-MMA (JLB)

1

Bank, N.A., 525 F.3d 855, 857 n.1 (9th Cir. 2008) (quoting 11 U.S.C. § 107(a)); see also

2

Swartz, 2015 WL 846789, at *3 (taking judicial notice of a voluntary petition filed in

3

bankruptcy court). Lastly, Exhibits B and J are matters of public record, and not subject

4

to reasonable dispute. See Fed. R. Evid. 201(b). Accordingly, the Court GRANTS

5

Defendant’s request for judicial notice as to Exhibits A-L.

6

Moreover, Plaintiff attaches four (4) exhibits to her opposition to the instant

7

motion (Exhibits 1-4), requesting that the Court incorporate by reference such documents

8

into the Complaint because “the complaint specifically refers to these relevant

9

documents[.]” Doc. No. 9 at 8. Specifically, Exhibit 1 is a copy of the billing statement

10

Plaintiff received from Wells Fargo, dated September 18, 2018. See Doc. No. 9-1.

11

Exhibits 2 and 3 are copies of Plaintiff’s Experian and TransUnion Credit reports,

12

respectively. See Doc. Nos. 9-2, 9-3. Exhibit 4 is a copy of a “Notice to Postponement

13

of Trustee’s Sale” regarding the subject property. See Doc. No. 9-4. Defendant did not

14

file an opposition to Plaintiff’s request to incorporate by reference Exhibits 1-4 into the

15

Complaint.

16

“[E]ven if a document is not attached to a complaint, it may be incorporated by

17

reference into a complaint if the plaintiff refers extensively to the document or the

18

document forms the basis of the plaintiff's claim.” Ritchie, 342 F.3d at 908 (internal

19

citations omitted). “A court may consider a writing referenced in a complaint but not

20

explicitly incorporated therein if the complaint necessarily relies on the document and its

21

authenticity is unquestioned.” Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998),

22

superseded by statute on other grounds in Abrego v. Dow Chem. Co., 443 F.3d 676 (9th

23

Cir. 2006).

24

Here, the Court notes that contrary to Plaintiff’s assertion, the Complaint does not

25

specifically reference any of the four exhibits described above. In construing Plaintiff’s

26

Complaint liberally, however, the Court finds that the four exhibits form the basis of

27

Plaintiff’s claims, and the authenticity of such documents is unquestioned. See Ritchie,

28

342 F.3d at 908. As such, the Court finds that Exhibits 1-4 are incorporated by reference
-6-

18cv0049-MMA (JLB)

1

into Plaintiff’s Complaint.

2

B.

3

Defendant’s Motion to Dismiss
In its motion, Defendant argues that the Court should dismiss Plaintiff’s Complaint

4

because each of Plaintiff’s causes of action are defectively pleaded, and Plaintiff’s state

5

law claims are preempted by federal law. See Doc. No. 6-1. The Court proceeds by first

6

addressing Plaintiff’s claim arising under the FCBA.

7

1.

8

In his Complaint, Plaintiff alleges that Defendant “adversely” reported on

9

Plaintiff’s credit after Plaintiff provided notice to Defendant regarding alleged disputed

Fair Credit Billing Act Claim

10

billing errors in violation of the FCBA. See Complaint ¶ 8; see also 15 U.S.C. §

11

1666a(a). In his opposition to the instant motion, Plaintiff provides additional details

12

indicating that Defendant sent a billing statement to Plaintiff on or around September 18,

13

2017, that listed an unpaid principal balance of $499,000.38 on the mortgage loan. See

14

Doc. No. 9 at 7-8; see also Doc. No. 9-1. Plaintiff disputed the amount of the billing

15

statement by filing for Chapter 13 bankruptcy on September 28, 2017. Doc. No. 9 at 7-8.

16

Plaintiff claims that Defendant’s failure to respond to the alleged billing error within

17

sixty days, in addition to adversely reporting on Plaintiff’s credit, violates the FCBA. See

18

id.

19

“Congress enacted the FCBA in order to regulate billing disputes involving ‘open

20

end consumer credit plans.’” Lyon v. Chase Bank USA, N.A., 656 F.3d 877, 880 (9th Cir.

21

2011) (quoting 15 U.S.C. § 1666). “An open end credit plan is one where the creditor

22

reasonably contemplates repeated transactions, which prescribes the terms of such

23

transactions, and which provides for a finance charge which may be computed from time

24

to time on the outstanding unpaid balance.” Roybal v. Equifax, 405 F. Supp. 2d 1177,

25

1182 (E.D. Cal. 2005); see 15 U.S.C. § 1602(j). “If a credit-card holder sends a written

26

notice disputing a charge within sixty days of receiving a bill, the FCBA requires a

27

credit-card issuer to acknowledge the dispute within thirty days, investigate the matter,

28

and provide a written explanation of its decision within ninety days.” Lyon, 656 F.3d at
-7-

18cv0049-MMA (JLB)

1

880. “After receiving notice from an obligor as provided in section 1666(a) or this title, a

2

creditor or his agent may not directly or indirectly threaten to report to any person

3

adversely on the obligor’s credit rating or credit standing because of the obligor’s failure

4

to pay the amount indicated by the obligor[.]” 15 U.S.C. § 1666a(a).

5

Here, the Court finds that Plaintiff fails to state a claim under the FCBA. First,

6

Plaintiff fails to allege that his loan constituted an open-end credit transaction. Plaintiff’s

7

Complaint quotes various provisions of the FCBA without providing any factual

8

allegations. See Complaint ¶¶ 12-14. As noted above, the FCBA applies only to open-

9

end consumer credit plans, like credit card accounts. See 15 U.S.C. § 1666; see also

10

Gray v. Am. Express Co., 743 F.2d 10, 13 (D.C. Cir. 1984) (“The Fair Credit Billing Act

11

seeks to prescribe an orderly procedure for identifying and resolving disputes between a

12

cardholder and a card issuer as to the amount due at any given time.”) (emphasis added).

13

In fact, numerous courts have found that mortgage transactions are closed-end credit

14

transactions, and thus not governed by the FCBA. See, e.g., Frank v. Wells Fargo Bank.

15

Nat. Ass’n, No. 11-CV-8035-PCT-NVW, 2011 WL 1480041, at *5 (D. Ariz. Apr. 19,

16

2011) (“Plaintiff’s allegation that Defendants violated the FCBA by reporting derogatory

17

credit ratings to national credit reporting agencies and failing to respond to Plaintiff’s

18

written complaint fails because the FCBA’s prohibitions on reporting a defaulting debtor

19

apply only in cases of open-end credit accounts, not mortgage transactions”); Allen v.

20

Homeq Servicing Inc., No. 8-CV-1698-MMA, 2008 WL 2609801, at *1 (N.D. Cal. June

21

30, 2008) (noting that Section 1666(a) applies only to open end consumer credit plans

22

and “the mortgage at issue is not an open end consumer credit plan.”); Wilkinson v. Wells

23

Fargo Bank MN, No. 6-CV-1288, 2007 WL 1414888, at *3 n.4 (E.D. Wis. May 9, 2007)

24

(“To the extent that Wilkinson alleges a mortgage loan in the complaint, that loan creates

25

a closed-end credit relationship”); Roybal, 405 F. Supp. 2d at 1180 (“Because the

26

definition of ‘creditor’ as used in section 1666 only applies to creditors offering open end

27

credit plans and Plaintiffs have not alleged that the transaction underlying this claim is

28

based on an open end credit plan, this claim must be dismissed with leave to amend.”).
-8-

18cv0049-MMA (JLB)

1

Based upon Plaintiff’s failure to allege the existence of an open-end credit relationship

2

that is governed by the FCBA, Plaintiff’s FCBA is subject to dismissal.

3

Second, even if Plaintiff could sufficiently allege the existence of an open-end

4

credit relationship subject to the FCBA’s requirements, Plaintiff fails to show that filing a

5

Chapter 13 bankruptcy petition is sufficient “notice” of a billing error required by Section

6

1666(a). See 15 U.S.C. § 1666(a)(1)-(3) (noting that the notice the obligor sends to the

7

creditor must set forth the obligor’s name and account number, indicate the obligor’s

8

belief that the statement contains a billing error and the amount of such billing error, and

9

explain the reasons for the obligor’s belief that the statement contains a billing error).

10

Plaintiff provides no explanation or argument relating to the sufficiency of the notice

11

provided to Defendant. As such, Plaintiff fails to state a claim under the FCBA. See

12

Frank, 2011 WL 1480041, at *5 (“[I]n any event, Plaintiff has not shown that her notice

13

of written complaint complies with the requirements of 15 U.S.C. § 1666(a).”).

14

Accordingly, because Plaintiff fails to allege the existence of an open-end credit

15

relationship, and fails to show that the notice provided to Defendant complies with the

16

requirements of the statute, the Court DISMISSES Plaintiff’s FCBA claim with leave to

17

amend.

18

2.

19

Plaintiff’s remaining claims arise under state law. In his Complaint, Plaintiff

State Law Claims

20

alleges that this Court has federal question jurisdiction and diversity jurisdiction. See

21

Complaint ¶ 2. With respect to diversity jurisdiction, however, Plaintiff fails to allege

22

any facts that the parties in this action are diverse, and that the amount in controversy

23

exceeds $75,000. See 28 U.S.C. 1332(a)(1) (noting that federal courts have diversity

24

jurisdiction over “all actions where the matter in controversy exceeds the sum or value of

25

$75,000, exclusive of interest and costs,” and the dispute is between citizens of different

26

states). Aside from indicating that Plaintiff is a resident of the County of San Diego,

27

Plaintiff summarily states “Defendant Wells Fargo Bank, National Association (“Wells

28

Fargo”) is a national banking association established under the laws of the United States
-9-

18cv0049-MMA (JLB)

1

of America.” Complaint ¶ 5. Plaintiff further notes that Wells Fargo Home Mortgage,

2

Inc. as a “California corporation,” and a “division of Wells Fargo Bank, N.A.” Id. As

3

such, Plaintiff fails to establish that the Court has diversity jurisdiction.

4

The Court’s only remaining basis for jurisdiction over Plaintiff’s state law claims,

5

as currently pleaded, is supplemental jurisdiction. Under 28 U.S.C. § 1367, a district

6

court “may decline to exercise supplemental jurisdiction over a state law claim if” the

7

court “has dismissed all claims over which it has original jurisdiction.” 28 U.S.C. §

8

1367(c). Unless “considerations of judicial economy, convenience[,] and fairness to

9

litigants” favor the exercise of supplemental jurisdiction, “a federal court should hesitate

10

to exercise jurisdiction over state claims.” United Mine Workers v. Gibbs, 383 U.S. 715,

11

726 (1966). At this time, the Court DEFERS ruling on the sufficiency of Plaintiff’s state

12

law claims until Plaintiff can sufficiently allege a claim arising under federal law, or

13

demonstrate that the Court has diversity jurisdiction.

14

CONCLUSION

15

Based on the foregoing, the Court GRANTS IN PART Defendant’s motion to

16

dismiss, and DISMISSES Plaintiff’s FCBA claim with leave to amend. Plaintiff must

17

file an amended complaint that cures the deficiencies identified herein on or before

18

June 8, 2018. The Court DEFERS ruling on the sufficiency of Plaintiff’s state law

19

claims until Plaintiff can state a claim arising under federal law, or demonstrate that the

20

Court has diversity jurisdiction.

21
22

IT IS SO ORDERED.

23
24
25
26
27

Dated: May 17, 2018
_____________________________
HON. MICHAEL M. ANELLO
United States District Judge

28
-10-

18cv0049-MMA (JLB)